Recording Financial Information Liz MacFadyen 22 February 2017

Basis of Updates to RFI HMRC amendments to legislation for treatment VAT where cash/prompt payment discounts are offered Effective from 2015

Overview of changes to VAT All invoices are now issued and recorded with VAT at standard rate Where PPD offered, PPD terms and amounts should be stated also If the discounted price is paid in accordance with the terms, the accounting records are adjusted at this time

Updates to RFI Revised Unit Specification Outcome 1 - calculation of PPD for payments to suppliers and receipts from customers - wording modified slightly to require calculation of VAT Outcome 2 and 3 - Minor wording changes

Updates to RFI (cont) Exemplars/ASPs 1 and 2 updated to reflect changes to VAT for PPD, as per Unit Specification For implementation in Session 2017/18

Outcome 1 Day Books and Cash Book Very minor modifications to questions to meet the revised Unit Specification Day books – all invoices/credit notes entered at standard rate VAT Cash Book Discount columns removed Supplier payments and customer receipts recorded net of PPD, where appropriate

Outcome 1 (Continued) Two additional day books: Discount Allowed Day Book Discount Received Day Book These are the books of original entry for recording PPD Unit Specification allows other appropriate books to be used

Outcome 2 Postings to Ledgers Generally remains unchanged except for postings to ledgers from the 2 new day books Discount Allowed Day Book - Dr Discount allowed (net amount) - Dr VAT (VAT adjustment) - Cr Customer account (gross amount) Discount Received Day Book - Dr Supplier account (gross amount) - Cr VAT (VAT adjustment) - Cr Discount Received (net amount)

Outcome 3 VAT Return Include relevant figures from Discount Allowed and Discount Received Day Books in VAT Return workings

Discussion and Questions?